re: Give me scenarios where whole life/VUL would be a good idea to own

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Insurance companies pay the highest commissions on whole life and annuities.

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Do they? What are the percentages?

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You don't think that life insurance companies love selling Term for the fact that it's a money maker for them? Serious question.

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You seem to imply that whole life isn’t a massive money maker too.

Insurance companies don’t sell any insurance where they lose money, so let’s move on from the absurdity of that argument.

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can I sell it to you? Ole Gil could really use that commission!

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They’re very popular for life insurance salesmen because the upfront comp per time and cash outlay is pretty tough to beat if you’re trying to get paid.

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It's how I can buy all you degenerates steak at Ruth's!

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Do they? What are the percentages?

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I've heard from agents that whole life pays from 70% up to 140% the annual premium.

Agents have told me that term pays from 20% up to 70% the annual premium.

I presume the difference would be lead sourcing, layers of middle management, and possibly volume (someone who writes $10k premium in a year gets a lower percentage than someone who writes $30k premium who gets a lower percentage than someone who writes $100k+ premium, etc).

I'm sure that you could give a more anecdotal response which could qualify as a better real world reply.

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I’ll bite.

I believe that some base amount of whole life makes sense to buy when you’re younger and just getting started with a family. You can’t rely on term because a) it will eventually run out and b)you don’t know what your financial situation or health situation will be at that point in the future. Some amount to close your affairs and help out your beneficiaries that is guaranteed to be there has value.

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Term eventually running out is the point. A financially successful person should be debt free near retirement. Or a financially successful person should have exponentially greater assets because he/she has been leveraging with compound growth for 40ish years.

A financially successful person should have money and assets capable of closing out affairs for passing away in their retirement.

The purpose of insurance originally was to cover gaps in risk that one could not afford.

I've probably been blasted for putting this on the money board a half dozen times. But whole life is for poor people.
It covers expenses that one will not be prepared to handle 40+ years down the road which no person can escape.
It adds a layer of financial protection with cash value that can supplement insurance premiums during life's hardships.
It adds a layer of financial savings that someone who is not qualified as a financially successful person would otherwise not achieve.

I argue that a super wealthy person who wants to avoid exposure to estate taxes can find a better financial alternative to permanent life insurance without a cash value component. It is cheaper and more efficient.
If you want life insurance to be just life insurance (i.e. handle estate taxes upon death), whole life is more expensive with more bells and whistles than you need.

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Term eventually running out is the point. A financially successful person should be debt free near retirement.

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Agreed…but when you’re 23 with a new wife looking to start a family and are in good health…you don’t know what your situation will be in 20 years. So in this case I could see purchasing a whole life policy for some reasonable amount when it’s cheap and you can lock in insurability.

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I presume the difference would be lead sourcing, layers of middle management, and possibly volume

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The difference is whether the LI company is locking you in or not. For a 20 year term policy on a healthy, young person, you can get $1m for $50/mo. If the agent gets 70% first year and then the insured drops the policy, they are out $420. But they also took in $180 to cover their expenses. Usually there is no residual to the agent so they keep the $600 for the other 19 years.

On a whole life, let's say that same $1m is $300/mo. and they pay out 90% first year, they are paying out $3,240 and keeping $360 to cover expenses. In year 2 and beyond the payout may fall to 3% residual (I don't know this, just an example) and they keep the difference every year and build some cash value. The big BUT is that cash value is surrendered if you tap it within a specific time period, usually 10+ years. So they have you by the balls or they get to keep a significant portion of your money.

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You die a month in and it’s the best thing you could ever buy.

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I think that is my argument.
If you die a month in, a $500k 10 year term will pay the same amount as a $500k whole life.

The difference being that a 10 year term may cost just over $20/month and the whole life may be well over $200+.

So then the question of value for the whole life insurance policy comes in at advanced ages over 78.
If life is done properly, the question of "need" and "gap" can easily be scrutinized for $500,000 of life insurance coverage.

There can be needs. There most definitely are wants.
But at what cost?
What is the out of pocket for that $500k whole life policy?
And what are the opportunity costs for alternatives of meeting those needs/wants so many years into the future.